United States District Court, D. Alaska
ORDER AND OPINION [RE: MOTION AT DOCKET 13 ]
JOHN
W. SEDWICK SENIOR JUDGE, UNITED STATES DISTRICT COURT
I.
MOTION PRESENTED
At
docket 13, Defendant State Farm Mutual Automobile Insurance
Company (State Farm) filed a motion for Partial Summary
Judgment in which it seeks dismissal of the bad faith claim
against it or, alternatively, seeks bifurcation of the bad
faith claim from other claims in the complaint. Plaintiff
Michelle Leibold (Leibold) responds at docket 19. State Farm
replies at docket 20. Oral argument was not requested and
would not be of assistance to the court.
II.
BACKGROUND
On June
1, 2016, Leibold was involved in a three-car accident in
Anchorage, Alaska. Leibold was hit from behind and pushed
into the vehicle in front of her. Leibold was insured by
State Farm and had an auto policy with Underinsured
Motorist/Uninsured Motorist (UIM) Coverage of $100, 000 and
Medical Payments Coverage of $25, 000. Following the
accident, Leibold sought and received Medical Payments
Coverage under her policy for injuries to her back, neck,
left knee, and right shoulder, as well as for headaches. She
continued to receive treatment for residual neck and shoulder
injuries throughout 2017 which her State Farm policy covered.
In total, at the time of the parties' briefing, State
Farm had paid $19, 203.41 for Leibold's medical treatment
and had pre-approved medical expenses up to the policy's
limit of $25, 000.
In May
of 2018, Leibold reached a tentative agreement with USAA, the
insurer of the driver who had caused Leibold's car
accident, whereby USAA offered to pay the liability limit of
$50, 000 under the driver's policy. In order to finalize
the agreement, Leibold needed to obtain a medical payments
lien waiver from State Farm to ensure that State Farm would
not seek to recoup the medical payments already made under
Leibold's State Farm policy. Leibold believed State Farm
would provide the waiver because USAA's payment $50,
000-the upper limit of the policy-was not enough to cover her
alleged damages and make her whole. She believed that her
past and future damages totaled $150, 000. She intended to
recover the remainder of her damages from her State Farm UIM
coverage.
Leibold,
through her counsel, informed State Farm about the proposed
USAA settlement. She asked State Farm for the necessary
waiver and stated her intention to file a UIM claim for the
remainder of her damages. On August 7, 2018, after a few
months of communications between State Farm representatives
and Leibold's counsel, State Farm formally declined to
issue a waiver, stating that it did not have information to
prove that the USAA settlement failed to make her whole.
Leibold
filed this lawsuit against State Farm on August 14, 2018,
claiming that State Farm's denial was made in bad faith.
Two days after the complaint was filed, State Farm proposed
to close Leibold's UIM claim for $5, 000, explaining that
it calculated her total past and future damages to be about
$74, 000 and therefore, between the $19, 000 already paid
plus the $50, 000 from USAA, an additional $5, 000 from her
UIM coverage would make her whole. State Farm's proposal
to pay $5, 000, in addition to what it had already paid for
her medical care and what Leibold would receive from USAA,
effectively waived any medical payment claim lien it had
previously asserted. That is, State Farm's calculations
and ultimate offer conveyed its intent not to recoup past
medical payments. Leibold asserts that this after-the-fact
proposal supports her bad faith claim against State Farm,
arguing that its post-complaint offer demonstrates that State
Farm "tr[ied] to leverage waiver of the [medical payment
claim] in exchange for closure of the plaintiff's UIM . .
. claim."[1]
III.
STANDARD OF REVIEW
Summary
judgment is appropriate where “there is no genuine
dispute as to any material fact and the movant is entitled to
judgment as a matter of law.”[2] The materiality requirement
ensures that “[o]nly disputes over facts that might
affect the outcome of the suit under the governing law will
properly preclude the entry of summary
judgment.”[3]Ultimately, “summary judgment will
not lie if the . . . evidence is such that a reasonable jury
could return a verdict for the nonmoving
party.”[4] However, summary judgment is mandated
“against a party who fails to make a showing sufficient
to establish the existence of an element essential to that
party's case, and on which that party will bear the
burden of proof at trial.”[5]
The
moving party has the burden of showing that there is no
genuine dispute as to any material fact.[6] Where the
nonmoving party will bear the burden of proof at trial on a
dispositive issue, the moving party need not present evidence
to show that summary judgment is warranted; it need only
point out the lack of any genuine dispute as to material
fact.[7] Once the moving party has met this burden,
the nonmoving party must set forth evidence of specific facts
showing the existence of a genuine issue for
trial.[8]All evidence presented by the non-movant
must be believed for purposes of summary judgment, and all
justifiable inferences must be drawn in favor of the
non-movant.[9]However, the non-moving party may not rest
upon mere allegations or denials but must show that there is
sufficient evidence supporting the claimed factual dispute to
require a fact-finder to resolve the parties' differing
versions of the truth at trial.[10]
IV.
DISCUSSION
A.
Request for Summary Judgment on the Bad Faith Claim
Leibold
alleges that State Farm's handling and denial of her
request for a medical payments lien waiver constitutes a
breach of the duty of good faith and fair dealing. She
alleges that State Farm delayed its response to her request
for a waiver and that State Farm then denied her request
without an investigation into her assertion that the USAA
settlement failed to make her whole and without a reasonable
basis. Leibold alleges State Farm's denial of her request
for a waiver was used to compel her to resolve her UIM claim
on terms more favorable to State Farm.
Alaska
recognizes a cause of action against insurers for a breach of
the duty of good faith and fair dealing.[11]
"Although [the Alaska Supreme Court has] declined to
define the elements of the tort of bad faith in an insurance
contract, [its] precedent makes clear that the element of
breach at least requires the insured to show that the
insurer's actions were objectively unreasonable under the
circumstances."[12] To prove bad faith, the insured must
show that the insurer's delay or denial of a claim was
"made without a reasonable basis."[13] While an
insurer does not act in bad faith simply by challenging a
debatable claim, it must still act reasonably in processing
the claim.[14] An insurer's violations of
Alaska's Unfair Claim Settlement Practices Act does not
require a finding of bad faith, but conduct that is described
in that statute-for example, failure to acknowledge and act
promptly upon communications regarding a claim, refusing to
pay a claim without a reasonable investigation of all of the
available information and without an explanation of the basis
for the denial of the ...